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iPad Mini Sales Affected by Information Cascade and Direct-Benefit Effect

Apple announced that they have sold 3 million iPads over the weekend, starting from Friday.  Even the morality of the great amount of people lined up outside the stores around the time of Hurricane Sandy had to be questioned.  Others thought that the buyers should have cared more about the aftermath of Hurricane Sandy rather than a new iPad.  However, even with such numbers, it seems like the new iPad Mini is not so popular.  Apple would not announce the amount of iPad Minis they have actually sold, and it is noticeable, that people were not as eager to buy the iPad Minis.  The starting price at $329 of the iPad Mini most likely played a major component of creating the smaller crowd.  Furthermore, the iPad Mini had to be pre-ordered and then picked up at a designated time.  This may be another component that contributed to the smaller sales.  These effects can be explained by direct-benefit effect and information cascade.

In the past, it has become a trend to be the first to get to the Apple store and buy their newest product.  As other people notice the huge lines outside of the Apple store, they would naturally think that the product must be really good and join the line themselves.  This is the effect of information cascade, which happens when people see the action of others and base their decision off of that observation despite any of their own prior information. This can explain why people having to pre-order the Minis and go to pick it up at a certain time causes a smaller crowd. With this type of selling/buying method, there would be no need for a line in front of the Apple store for the Mini.  Therefore, other people would not be affected by information cascade.  In fact, if people visually notice less people going for the iPad Mini, then they would be hesitant and wait for the feedbacks before deciding whether or not to buy.  This can be seen through the customers that CNN interviewed about the iPad Mini.  One person who was playing with the iPad Mini on display told CNN ‘“I have several other tablets, so I’m just going to wait”’(2).

Furthermore, this can demonstrate the direct-benefit effect, which happens when one follows the actions/ behaviors of others and benefit from it.  Since the starting price also seemed to be the main concern of most people, if less people buy the iPad Mini, then the price would probably lower.  Hence, this is a generated benefit from following the behaviors of others.

-Jiggly

(1)  http://money.cnn.com/2012/11/05/technology/mobile/apple-ipad-sales/index.html

(2)  http://www.cnn.com/2012/11/02/tech/mobile/apple-ipad-mini-sale/index.html?hpt=te_r1

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